Page 111 - HBR's 10 Must Reads 20180 - The Definitive Management Ideas of the Year from Harvard Business Review

CAPPELLI AND TAVIS
Idea in Brief

The Problem favor of giving people less
formal, more frequent feedback
By emphasizing individual ac- that follows the natural cycle
countability for past results, tradi-
tional appraisals give short shrift of work.
to improving current performance The Outlook
and developing talent for the fu-
ture. That can hinder long-term This shift isn’t just a fad—real busi-
competitiveness. ness needs are driving it. Support
at the top is critical, though. Some
The Solution
firms that have struggled to go
To better support employee de- entirely without ratings are trying
velopment, many organizations a “third way”: assigning multiple
are dropping or radically chang- ratings several times a year to
ing their annual review systems in encourage employees’ growth.

emphasis on improvement and growth over accountability. But the
new perspective is unlikely to be a flash in the pan because, as we
will discuss, it is being driven by business needs, not imposed by HR.
First, though, let’s consider how we got to this point—and how
companies are faring with new approaches.

How We Got Here

Historical and economic context has played a large role in the evolu-
tion of performance management over the decades. When human
capital was plentiful, the focus was on which people to let go,
which to keep, and which to reward—and for those purposes, tradi-
tional appraisals (with their emphasis on individual accountability)
worked pretty well. But when talent was in shorter supply, as it is
now, developing people became a greater concern—and organiza-
tions had to find new ways of meeting that need.

From accountability to development
Appraisals can be traced back to the U.S. military’s “merit rating” sys-
tem, created during World War I to identify poor performers for dis-
charge or transfer. After World War II, about 60% of U.S. companies

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